Good Afternoon Paycheck Protection Program Borrower,
Last evening, the SBA published great news for the Paycheck Protection Program, which we would like to share with all borrowers. A new interim final rule was published to further simplify the forgiveness process for loans of $50,000 and under.

The SBA issued an alternative Loan Forgiveness Application, SBA Form 3508S, for use by borrowers with PPP loans of $50,000 or less with the exception for those borrowers that together with their affiliates they received loans totaling $2 million or greater. We are currently reviewing the new interim final rule, SBA Form 3508S and instructions released by the SBA and will provide additional information in the coming weeks.
Here are some highlights of the new SBA Form 3508S:

  • Two-page forgiveness application, which includes borrower certifications

  • Application does not require submission of forgiveness calculations

  • Applicant will be required to submit documentation verifying the forgivable payroll and non-payroll expenses

  • Borrower should retain all documents for a period of six years

  • Borrower is exempt from any reductions in the loan forgiveness amount based on reductions in full-time equivalent (FTE) employees that would otherwise apply

  • Borrower is exempt from any reductions in the loan forgiveness amount based on reductions in employee salary or wages that would otherwise apply
The Bank has gradually been inviting borrowers to the PPP forgiveness process since the end of August and has initiated submission to the SBA after bank approval for many. The remaining loans that are over $50,000 will be invited to the forgiveness process by the end of October. A Loan Officer will be reaching out directly to invite these remaining borrowers, provide an application package and portal information.

We request any borrowers that have already been invited to apply but have yet to load the forgiveness application and supporting information into the portal, please do so at your earliest convenience. If you have any questions, our Loan Officers stand ready to assist you. Please see the attached PPP Contact sheet to identify the Loan Officer assigned to your county.
Additionally, the PPP Flexibility Act legislation passed on June 5, 2020 discusses the following provision to “extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).” 

The SBA and Treasury Department released information this week confirming that all PPP loans are automatically extended 10-months of deferred payments of principal, interest and fees following the end of their covered period. In order to comply with the language of the Flexibility Act, the Bank will withhold all repayment obligations at this time despite such requirements outlined in the loan closing documentation.
The released statement further states, “SBA does not require a formal modification to the promissory note” and that “a modification of a promissory note to reflect the required statutory deferral period under the Flexibility Act will have no effect on the SBA’s guarantee of a PPP loan.” 

Farmers National Bank is willing to draft a change in terms agreement for any borrower that wishes to sign such an agreement in order to officially document the above regarding PPP loan repayment. As clarified by the SBA, a change in terms agreement is not necessary at this time, however, the bank will accommodate any such request. If you would like to request a change in terms agreement please contact your PPP forgiveness application assigned Loan Officer as outlined in the attached. 
Please remain safe and well! We appreciate the opportunity to service your Paycheck Protection Program loan.  
Warm Regards,

Robert A. Vernick
Senior Vice President
Chief Lending & Bus. Dev. Officer
NMLS# 977437
The Farmers National Bank of Emlenton
612 Main Street
Emlenton, PA 16373
p: 844.882.6436
c: 724.991.9047
f: 724.867.9326